CFIN, 8th Edition
Scott Besley, Eugene Brigham
TEST BANK
Includes All Chapters (1 to 16)
What’s Included?
✔ Complete Chapter-by-Chapter Test Bank
✔ Multiple Choice Questions (MCQs)
✔ True / False (T/F)
,Chap 01- CFIN8
Indicate whether the statement is true or false.
1. The disadvantages associated with a proprietorship are similar to those of a partnership. A major difference
between these two forms of business organization is that a partnership requires a legal agreement that commits
the partners' personal assets, which means that partnerships have little difficulty raising large amounts of capital
(similar to corporations).
a. True
b. False
ANSWER: False
2. The proper goal of the financial manager should be to maximize the firm's expected profit, because this will add
the most wealth to each of the individual shareholders (owners) of the firm.
a. True
b. False
ANSWER: False
3. The riskiness inherent in a firm's earnings per share (EPS) depends on both the types of projects the firm takes
on and the manner in which the projects are financed.
a. True
b. False
ANSWER: True
4. As hostile takeovers are most likely to occur when a firm's stock is overvalued, the managers have a strong
incentive to undervalue the firm's stock relative to its potential.
a. True
b. False
ANSWER: False
5. The corporate charter is a document filed with the secretary of the state in which a firm is incorporated that
provides information about the corporation, including its name, address, directors, and amount of capital stock.
a. True
b. False
ANSWER: True
6. A financial manager's task is to make decisions concerning the acquisition and use of funds for the greatest
benefit of the firm.
a. True
b. False
ANSWER: True
Page 1
,Name: Class: Date:
Chap 01- CFIN8
7. A proprietorship is an unincorporated business owned by one individual, and the owner benefits from the limited
liability for business, which limits personal losses to what the proprietor has invested in the company.
a. True
b. False
ANSWER: False
8. The term multinational corporation is used to describe a firm that operates in two or more countries.
a. True
b. False
ANSWER: True
9. Blockchain technology and digital ledger technology are not the same thing.
a. True
b. False
ANSWER: False
10. In a competitive marketplace, "good ethics" is a wonderful idea but an impractical standard, because there are
simply too few benefits to be gained from maintaining high business ethics.
a. True
b. False
ANSWER: False
11. Exchange rate risk is the risk that the cash flows from a foreign project will be worth less than those same cash
flows denominated in the parent company's home currency.
a. True
b. False
ANSWER: True
12. Incentive compensation plans are used to attract and retain top managerial talent as well as to align the interests
of management with shareholders.
a. True
b. False
ANSWER: True
13. Financial managers should seek the combination of assets, liabilities, and capital that generates the largest
expected projected income in the current accounting period.
a. True
b. False
ANSWER: False
Page 2
, Name: Class: Date:
Chap 01- CFIN8
14. If a firm's managers want to maximize stock price, it is in their best interests to operate efficient, low-cost
plants, develop new and safe products that consumers want, and maintain good relationships with customers,
suppliers, creditors, and the communities in which they operate.
a. True
b. False
ANSWER: True
15. Nations do not have the sovereignty to take over (expropriate) the assets of a firm without compensation.
a. True
b. False
ANSWER: False
16. To properly maximize the value of the firm, the financial manager should execute their duties independent of the
cash flow decisions made by other senior managers.
a. True
b. False
ANSWER: False
17. Industrial groups are organizations consisting of companies in different industries with common ownership
interests, which include firms necessary to sell and manufacture products.
a. True
b. False
ANSWER: True
18. Managers of firms that use alternative accounting techniques to inflate current earnings are likely to generate
long-term benefits to the shareholders of the firm.
a. True
b. False
ANSWER: False
19. Two key limitations of the proprietorship form of business involve potential difficulty in raising the necessary
capital and the presence of unlimited personal liability for business debts.
a. True
b. False
ANSWER: True
20. If a firm raises its product prices beyond reasonable levels, it will generally lose some of its market share.
a. True
b. False
ANSWER: True
Page 3
Scott Besley, Eugene Brigham
TEST BANK
Includes All Chapters (1 to 16)
What’s Included?
✔ Complete Chapter-by-Chapter Test Bank
✔ Multiple Choice Questions (MCQs)
✔ True / False (T/F)
,Chap 01- CFIN8
Indicate whether the statement is true or false.
1. The disadvantages associated with a proprietorship are similar to those of a partnership. A major difference
between these two forms of business organization is that a partnership requires a legal agreement that commits
the partners' personal assets, which means that partnerships have little difficulty raising large amounts of capital
(similar to corporations).
a. True
b. False
ANSWER: False
2. The proper goal of the financial manager should be to maximize the firm's expected profit, because this will add
the most wealth to each of the individual shareholders (owners) of the firm.
a. True
b. False
ANSWER: False
3. The riskiness inherent in a firm's earnings per share (EPS) depends on both the types of projects the firm takes
on and the manner in which the projects are financed.
a. True
b. False
ANSWER: True
4. As hostile takeovers are most likely to occur when a firm's stock is overvalued, the managers have a strong
incentive to undervalue the firm's stock relative to its potential.
a. True
b. False
ANSWER: False
5. The corporate charter is a document filed with the secretary of the state in which a firm is incorporated that
provides information about the corporation, including its name, address, directors, and amount of capital stock.
a. True
b. False
ANSWER: True
6. A financial manager's task is to make decisions concerning the acquisition and use of funds for the greatest
benefit of the firm.
a. True
b. False
ANSWER: True
Page 1
,Name: Class: Date:
Chap 01- CFIN8
7. A proprietorship is an unincorporated business owned by one individual, and the owner benefits from the limited
liability for business, which limits personal losses to what the proprietor has invested in the company.
a. True
b. False
ANSWER: False
8. The term multinational corporation is used to describe a firm that operates in two or more countries.
a. True
b. False
ANSWER: True
9. Blockchain technology and digital ledger technology are not the same thing.
a. True
b. False
ANSWER: False
10. In a competitive marketplace, "good ethics" is a wonderful idea but an impractical standard, because there are
simply too few benefits to be gained from maintaining high business ethics.
a. True
b. False
ANSWER: False
11. Exchange rate risk is the risk that the cash flows from a foreign project will be worth less than those same cash
flows denominated in the parent company's home currency.
a. True
b. False
ANSWER: True
12. Incentive compensation plans are used to attract and retain top managerial talent as well as to align the interests
of management with shareholders.
a. True
b. False
ANSWER: True
13. Financial managers should seek the combination of assets, liabilities, and capital that generates the largest
expected projected income in the current accounting period.
a. True
b. False
ANSWER: False
Page 2
, Name: Class: Date:
Chap 01- CFIN8
14. If a firm's managers want to maximize stock price, it is in their best interests to operate efficient, low-cost
plants, develop new and safe products that consumers want, and maintain good relationships with customers,
suppliers, creditors, and the communities in which they operate.
a. True
b. False
ANSWER: True
15. Nations do not have the sovereignty to take over (expropriate) the assets of a firm without compensation.
a. True
b. False
ANSWER: False
16. To properly maximize the value of the firm, the financial manager should execute their duties independent of the
cash flow decisions made by other senior managers.
a. True
b. False
ANSWER: False
17. Industrial groups are organizations consisting of companies in different industries with common ownership
interests, which include firms necessary to sell and manufacture products.
a. True
b. False
ANSWER: True
18. Managers of firms that use alternative accounting techniques to inflate current earnings are likely to generate
long-term benefits to the shareholders of the firm.
a. True
b. False
ANSWER: False
19. Two key limitations of the proprietorship form of business involve potential difficulty in raising the necessary
capital and the presence of unlimited personal liability for business debts.
a. True
b. False
ANSWER: True
20. If a firm raises its product prices beyond reasonable levels, it will generally lose some of its market share.
a. True
b. False
ANSWER: True
Page 3
